Tesla Has Been Burning Through $8,000 Per Minute

[William Maley]

Tesla is known for building quick vehicles, but they're also known for burning through a lot of cash. Bloomberg recently crunched some numbers on how fast Tesla goes through money and the amount is quite shocking.

According to their data, Tesla has been burning through $8,000 per minute (about $480,000 in an hour) for the past 12 months. At this rate, Bloomberg predicts that Tesla could run out of money by next August.

Tesla spending money like it is going out of style is not all that surprising. The automaker is trying to ramp up production of the Model 3 along with dealing with various issues. Still, the $8,000 per minute figure gives us an idea of how far Tesla still has to go before exiting what it calls 'production hell'.

Investors still are bullish on the electric car builder, with a share price of $317.81 at the close of trading yesterday. Tesla also has a market capitalization of more than $53 billion, beating the likes of Ford ($48 billion). The difference being is that Ford is able to consistently make a profit.

Tesla says they have enough cash to meet its target of building 5,000 Model 3 sedans per week by the end of March, and expects to “generate significant cash flows from operating activities” afterward. The company is also reservations on their Roadster due in 2020* to help raise funds. Buyers will need to plop down $50,000 for the standard model or $250,000 for the Founders Edition. Tesla will only produce 1,000 models of the Founders Edition, meaning they could possibly produce $250 million in income. 

“Whether they can last another 10 months or a year, he needs money, and quickly,” said Kevin Tynan, senior analyst with Bloomberg Intelligence. Tynan estimates that Tesla needs to raise $2 billion or more in capital by mid-2018 to stay afloat.

Source: Bloomberg

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[oldshurst442]

Question: How fast does the new Tesla Roadster go from 0-60?

Answer: 1.9 seconds.

 

 

 

The right answer is about

$8,000 Per Minute!!!

Now THAT is some serious speed! Id even call it...ludicrous!

 

Edited November 22, 2017 by oldshurst442

[balthazar]

Here's another way to look at the above numbers.

The theoretical $250,000,000 that the Founder's Edition Roadster would generate would last just 22 days at the current spending rate. Hardly seems worth it, once you consider whatever the COST to build them might be, and that it could apparently NOT be done inside of 2 year's production time, maybe 4.

- - - - -

Honestly, I have had strong hopes for Tesla- it's not everyday a new American brand emerges. The original Roadster was a decent first step, the Model S is definitely a success (other than no profit). But the X has had numerous problems and it's launch was bungled. OK- not the end of the world, everyone has missteps. But 14 years in & still no profit. Model 3 is the car to save Tesla, to finally make the entity solvent. Another bungled launch, worse than the X.

That's OK, I'm still on board, still pulling. Musk has to know this is his make or break project, he has to be working 22 hrs a day to get this thing, this thing he's taken a half million deposits on; RIGHT. The wait time has already been insane; this is 'do or die' time.

But just when you're sure the 'all's clear' bell will sound and thousands of Model 3's are pouring out of Fremont... NOT ONLY does he show a concept EV semi, he shows another concept Roadster! How much time did these projects take away from the Model 3, take away from the 100's of thousands of waiting buyers?

I'm beginning to really lose hope the company will last.

[smk4565]

Question is how much cash does Elon Musk have?  He might actually have $2 billion in cash to put into the company to keep it afloat until the Model 3 is at full production and the 2nd SUV hits the market since it will just be a tall Model 3

[balthazar]

Do the math. Even 2 billion will only last a little over 5 months, and he's not going to go personally bankrupt intentionally. Model 3 won't be in full production by then, nevermind develop a 6th model.

Model Y is shelved for the foreseeable future; NO WAY there's time, money or resources to work on that now. Model 3 seems all but forgotten.

Edited November 23, 2017 by balthazar

[Robert Hall]

And considering Musk has 2-3 other companies to run, Tesla isn't getting 100% of his focus.

[G. David Felt]

Burn baby Burn should be Tesla's new slogan! 

[smk4565]

Musk is worth $20 billion, if even 10% of that is cash and cash equivalents then he could have enough to buy time if he had to do it personally.  He did make $300,000 selling Boring company hats.  The cash flow issue is solved once the Model 3 is producing 5,000 cars a week, he just has to get it to that point and Tesla will be fine.

[balthazar]

Tesla was forced to bypass the promised $35K Model 3 in place of the $42-49K Model 3 because of negative cashflow. All their products have a negative margin so far. Model 3 doesn't change anything, and an 'entry-level' priced car is the LAST thing Tesla needs.

The company could make a trillion dollar/year, but if they spend 2 trillion, it's doomed.

Edited November 23, 2017 by balthazar

[smk4565]

27 minutes ago, balthazar said:

Tesla was forced to bypass the promised $35K Model 3 in place of the $42-49K Model 3 because of negative cashflow. All their products have a negative margin so far. Model 3 doesn't change anything, and an 'entry-level' priced car is the LAST thing Tesla needs.

The company could make a trillion dollar/year, but if they spend 2 trillion, it's doomed.

Not true, you can still order a Model 3 for $35,000.  Not sure when it will be built, but you can order one on their website.

I think he could issue more stock to raise money, he is still a wall street darling, because the Model 3 can stabilize the losses, if he gets the Semi truck he could change shipping and make a lot of money.

[balthazar]

Those that put down a reservation deposit are taken in chronological order. If all that is available is $42-49K vehicles, I assume one has the 'right' of refusal. Not sure if you are re-ordered, or how Musk has it set up. But the ("temporary") elimination of the base car is a red flag. Orders made now won't see their car built until 2020 or 2021... or later at this rate. Volume production could have turned the Tesla books around, but it may never happen.

BTW- I just saw a video of the semi reveal. I'd never heard Musk speak before, he is an awful orator.

Edited November 23, 2017 by balthazar

[G. David Felt]

5 hours ago, smk4565 said:

Musk is worth $20 billion, if even 10% of that is cash and cash equivalents then he could have enough to buy time if he had to do it personally.  He did make $300,000 selling Boring company hats.  The cash flow issue is solved once the Model 3 is producing 5,000 cars a week, he just has to get it to that point and Tesla will be fine.

According to the details of his $20.1 Billion networth as of Sept 7th 2017, 82% of it is stock as he controls 51% of Space X and a large chunk of Tesla. that means roughly 16.4 billion is stock so he really is only worth 3.6 billion if you look at cash and other assets. He is on record as sinking almost every penny he owns into these two companies. So if they die, he pretty much is wiped out.

[daves87rs]

If Musk had people on board that had been though stuff like this before I'd say there could be a chance.

 

Not looking good....

[balthazar]

Quote

Tesla's Model 3 has technically been on the market since July, but only to employees, their family members or people who are tight with the EV maker. Your pre-order hasn't been very useful if you're one of the hundreds of thousands of regular would-be owners. However, Tesla is finally, slowly opening things up. The company has confirmed that it's now inviting everyday buyers to complete their orders. Only a handful of customers are likely to get one when Tesla is still struggling to ramp up production, and you still have to order a high-spec model with the long-range battery and premium interior. However, you might not have to wait long -- at least some of those who've received an invitation are hearing that they'll get receive cars before the end of 2017, as promised.

Whether or not you're included in this first wave depends on a few factors. When you pre-ordered makes the biggest difference (you need to have put money down on day one), but you also stand a much better chance if you live in California and already own a Tesla car.

At this point, the real mystery is when Tesla will truly open the taps and fulfill regular orders en masse. The company recently pushed its 5,000-cars-per-week manufacturing goal back to the end of the first quarter of 2018, and there's no guarantee that production will scale as gracefully as you might like. It may be well into 2018 before many of the early buyers get their Model 3 rides, especially those who ordered a car at the vaunted $35,000 starting price.

~ Engadget

I didn't realize this, and it's yet another little detail that raises a flag.
"You can order a Model 3 online at the base price" but the reality is the above.

What company makes a car available in (July) but 5 months later (half a model year) is only just selling to the general public? Don't forget- as the Model 3 ramp up drags on & on, the $7500 credit that enticed so many to order is continually nibbled away by the S & X (Company is @ 147K US sales thru Oct '17). Then the "$28K" Model 3 is a $42K car. Ouch.

Edited November 23, 2017 by balthazar

[Cmicasa the Great]

We can argue about the situation to we are blue in the face.. fact is Tesla is not, has not been profitable..  and doesn't seem to be getting any richer in the near future, especially considering margins. WTF.. WTF!!! does anyone think that a company selling 63K Global $70-100K cars and is still broke, in the red.. no where near BLACK.. is gonna instantly become profitable selling a $35-45K car using essentially the same tech, same materials.. just smaller? And don't get it twisted.. I have long said that even the Model S fails at being luxury in interior quality and materials... more on par with +$35K Chevy than any current Cadillac.

TESLA NEED TO BE BOUGHT AND ENGULFED IN A LARGER OEM. That OEM gets the name.. which is ironically richly established.. and hopefully some of Musk's vision.. cause he is definitely a visionary. Can't take that from him. I would like GM to get just so they could have the Charging network.. while at the same time I wonder if they need any of the other tech because from what I've heard 2018-19 might just be a year where GM's EV tech surpasses anything that Tesla has out or coming.

[G. David Felt]

Soooooo, while we can debate how long the ability for a company to live in the red and be a darling of wall street, as I posted above. Musk is in no real position to bail Tesla out either since most of his wealth is tied up in stock of the two companies he owns.

Yes I would like to see them survive and especially as an American car company. With that said, does GM need to buy them? Not really sure about that as I think the next two auto's they bring out will be based on the BOLT platform and everything else will be on version 2.0 of that said platform. 

I suspect that 2.0 platform will be a true EV or PHEV / Hybrid platform to further reduce costs for a global platform.

Based on GMs presentation to the financial community, they have 7 SUVs, 5 CUVs, 2 cars and 2 vans for EV/PHEV/Hybrid. GM will surpass Tesla by 2020 I believe.

[smk4565]

GM doesn’t have the money to buy Tesla. No automaker does.  Toyota maybe has enough cash with a stock swap to make it work.  Toyota has $50 billion in cash, with a $188 billion value, they are the only one that could buy, and then Musk can refuse to sell too, which he would.

I think Musk will raise the money to keep Tesla going, he will find more investors because there is a chance that Tesla is Amazon and GM, Ford and Toyota are JC Penny, KMart and Macy’s just waiting to fall.

[balthazar]

Tesla cannot be sold for it's assets & stock valuation- the company isn't worth 100 cents/dollar. I doubt it's worth 50/100. It doesn't make any money, never has. Negative equity can never be sold at face value. Just the mere fact that if another company bought the stock speculator's darling, the valuation would drop significantly & immediately.

GM made nearly 10 billion profit last year- it's not going anywhere.
Volume & health-wise - Tesla is Sears with empty shelves & GM is Amazon.

[G. David Felt]

So Toyota was an early investor to a tune of $50 Million back in 2010 just before the IPO of Tesla. They have quietly sold off all their stock in June for $538 million as they are now a true competitor with their own dedicated EV division. Early on the Toyota Rav4 EV was a Tesla Powertrain with a Toyota body. According to a CNN report that partnership crashed at the end of 2014 due to a culture clash of Japan wanting to go mass market with cheap EV's and Tesla CEO Musk saying they can be profitable as a high end auto company and not wanting to allow toyota to keep using their tech resulting in a wind down and eventual sell off of Tesla Stock.

CNN Story

In 2013 Forbes did a formal review of Tesla and said the company was way overvalued and with their focus by CEO Musk selling S class cars for $80-$110,000 dollars they were bleeding money as each S class car was costing $1.1 million to make and this was in 2013. Forbes said at the time if Tesla could sell 40,000 S class cars for 2013, that would still leave a manufacturing cost of $550,000 per car.

Musk then came out and said that their Gen 3 technology would allow them to create a less luxury car priced at $35,000 and be more profitable than any other car company. The global community grabbed it and pushed the stock value up even more.

Forbes does imply that Musk is an outstanding Marketing person, but a terrible communicator of the real facts.

Forbes shows all the math in their story and states for 2013 Tesla stock trades at 117 times it's P/E ratio. In 2014 banks were stating that Tesla would be about 88 times valuation. Tesla then took to massive leasing of the Tesla S car which inflates Tesla revenue and understates their debt balance sheet.

Even with Tax and ZEV credits where Tesla makes a hefty amount of about half a billion a year, the company is on a Utopian goal that is not sustainable.  End result is Forbes is just as baffled by the ability to stay alive bleeding money. They clearly state it is a CULT Stock where reason is thrown out the window.

Forbes Story

Business Insider wrote this story in July 2017 and titled it: "It might be time for Tesla to get out of the car business!" and they would be right in stating it I believe. End result with all the profitable cash heavy auto companies, Tesla is about to be dumped into the deep end where they cannot swim with their current massive debt load even if they do start to deliver the Tesla 3 in quantity. They blame it on a couple of things, 1) A victim of Musk's vision. 2) A business for the Nutty. 3) Hard to change course as Tesla does a Joint Venture with a Chinese partner to build auto's in China and the clash that is about to happen.

End result, not a financially exciting business to get into, but a financially depressing black hole that is sucking up money faster than most can understand.

All the stories clearly highlight the impact Tesla has had on the global auto business.

One thing that I have realized in looking at this is that Tesla as a sell off company is really only valued between $5 to $10 billion at most and that still will not cover all the debt they have incurred.

Not a matter of IF, but a matter of WHEN Tesla will have to go bankrupt or be sold I believe.

[Cmicasa the Great]

11 hours ago, dfelt said:

Soooooo, while we can debate how long the ability for a company to live in the red and be a darling of wall street, as I posted above. Musk is in no real position to bail Tesla out either since most of his wealth is tied up in stock of the two companies he owns.

Yes I would like to see them survive and especially as an American car company. With that said, does GM need to buy them? Not really sure about that as I think the next two auto's they bring out will be based on the BOLT platform and everything else will be on version 2.0 of that said platform. 

I suspect that 2.0 platform will be a true EV or PHEV / Hybrid platform to further reduce costs for a global platform.

Based on GMs presentation to the financial community, they have 7 SUVs, 5 CUVs, 2 cars and 2 vans for EV/PHEV/Hybrid. GM will surpass Tesla by 2020 I believe.

Yeah.. I feel the same.. even the name, if I think about it, really may not be worth that much in terms of EV buyers if GM brings out the right Boltech type products. 

[smk4565]

GM and Ford make profit because the annual sales rate is 17 million cars, there are forecasts that post 2030 the annual sales rate could be 6 million cars, that is well below the 2009 levels than drove GM to bankruptcy.  

Airborne drones will replace cars at some point, might be 10 years, might be 30, but at some point car sales will go into decline and never rebound.  The value in Tesla is the charging network, Solar City, solar roof, batteries, autonomous tech, etc all of which can be applied to a flying drone just as easily as it is to a car.

[balthazar]

• If profit were tied only to volume, Tesla is DOOMED. Remember- early on Tesla bragged the company would be profitable at 300 cars annually.

• Airborne passenger drones?? And you think it's hard to convince consumers to buy EVs??
Wait- you were saying EVs would replace ICEs in 10 years, now drones are going to kill off EVs AND ICEs in 10 years?
Convolution honed to a razor sharpness.

• SolarCity is under Tesla now- the CORPORATION as a whole makes no money. That includes SolarCity (I didn't look up the others tho).

Edited November 24, 2017 by balthazar

[G. David Felt]

2 hours ago, balthazar said:

• If profit were tied only to volume, Tesla is DOOMED. Remember- early on Tesla bragged the company would be profitable at 300 cars annually.

• Airborne passenger drones?? And you think it's hard to convince consumers to buy EVs??
Wait- you were saying EVs would replace ICEs in 10 years, now drones are going to kill off EVs AND ICEs in 10 years?
Convolution honed to a razor sharpness.

• SolarCity is under Tesla now- the CORPORATION as a whole makes no money. That includes SolarCity (I didn't look up the others tho).

Right now nothing Musk owns makes money. Lots of tech and potential, but no solid money makers yet.

[riviera74]

Elon Musk's mistake with Tesla is simple and mundane: his vision's reach exceeded his production grasp.  If he only started small (one model) and worked on that for about 7-10 years, then Tesla would actually turn a profit and generate cash flow.  But that would be way too sensible.  He wanted it all and wanted it yesterday.  When Jeff Bezos started Amazon, he did one thing: sell books online.  We know where Amazon is now.  If only Musk's ego told him to start really small and then grow organically.

[regfootball]

Tesla isn't doing anything that GM can't do.  And do better.  Still think GM is laying in the weeds for some future moment.  They've hinted at jumping in more on EV.  So, it wouldn't really make sense for GM to buy Tesla.  unless for SUPER cheap and some sort of knowledge that helps GM.  

Like organized manufacturing?  LMAO

The development of the charger network, development of cost effective and less toxic batteries, funding and building up the means to PRODUCE ELECTRICITY.....COST EFFECTIVELY and CHEAPLY..... still needs to happen before the major shift.  So my question is does Tesla die before the major shift.

Remember too, the oil folks still want to keep their revenue stream in place........